CAD 840 M DEAL - Ithaca Energy Inc Announces Recommended Takeover by Delek
Ithaca Energy Inc Announces Recommended Takeover by Delek
ABERDEEN, SCOTLAND -- (Marketwired) -- 02/06/17 -- Ithaca Energy Inc (TSX: IAE) (LSE: IAE)
(TSX: IAE; LSE: IAE)
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS IN THAT JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (EU NO. 596/2014).
Ithaca Energy Inc.
Recommended Takeover by Delek
6 February 2017
Ithaca Energy Inc. (TSX: IAE; LSE: IAE) ("Ithaca" or the "Company")
is pleased to announce that it has entered into a definitive support agreement (the "Agreement") with Delek Group Ltd ("Delek") on the terms of a cash takeover bid for all of the issued and to be issued common shares of Ithaca not currently owned by Delek or any of its affiliates for C$1.95 per share (the "Offer").
Highlights
-- The Offer is for a cash consideration of C$1.95 per share - this
equates to GBP 1.20 per share based on the exchange rate on 3
February 2017(1)
-- The Offer is unanimously recommended by the Board of Directors of
Ithaca (excluding the Delek related party Directors) and values the
entire issued and to be issued share capital of the Company at C$841
million (US$646 million)
-- The Offer provides shareholders with the opportunity to crystallise
the value of their holdings in cash and represents a 12% premium to
the TSX closing price of C$1.74 per share on 3 February 2017 and a 16%
and 27% premium to the 30 day and 60 day volume weighted average
prices respectively
-- The Offer price represents a substantial premium to the average
analyst consensus target price of C$1.60 per share(2)
-- The Offer implies a total enterprise value of approximately US$1.24
billion
-- Delek is an Israeli listed conglomerate with significant natural gas
exploration and production activities in the Eastern Mediterranean and
an existing 19.7% shareholder in Ithaca
Brad Hurtubise, Non-Executive Chairman, commented:
"We are very pleased to announce the Offer, which provides an attractive opportunity for all shareholders to secure a premium cash value for their investment following a sustained period of share
price growth and at a favourable point in the Company's evolution."
"A Special Committee of independent Directors has fully assessed the Offer, with input from the Company's financial advisor and an independent valuator, and believes the Offer is fair and in the best interest of the Company and its shareholders and unanimously recommends that the shareholders tender their shares to the Offer."
Further Information
The Offer is to be completed by way of a takeover bid under
applicable Canadian securities laws pursuant to which Delek or an affiliate of Delek will offer to purchase all the issued and to be issued common shares that the Delek group currently does not own for
a cash consideration of C$1.95 per share. Delek owns approximately 19.7% of the issued and outstanding common shares as at the date of this announcement through its affiliate DKL Investments Ltd.
Board of Directors Recommendation
The Board of Directors excluding the Delek related party Directors (the "Directors") considers the terms of the Offer to be fair and reasonable and in the best interests of Ithaca and its shareholders and accordingly unanimously recommends that common shareholders
accept the Offer in respect of their common shares.
The determination of the Directors was made upon the recommendation
of a special committee of independent directors (the "Committee"), which has been advised by RBC Capital Markets ("RBC") in its capacity as financial advisor. The Committee received a verbal fairness
opinion from RBC, to the effect that as at 5 February 2017 and
subject to the assumptions, limitations and qualifications set out in the opinion, the consideration under the Offer is fair, from a financial point of view, to Ithaca shareholders (other than Delek). RBC has confirmed that it will provide a written opinion to that effect on or before the date of the Directors' circular.
Given Delek's existing shareholding in the Company, in accordance
with the requirements of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"), FirstEnergy Capital LLP ("GMP FirstEnergy") has prepared and
delivered a draft formal valuation of the common shares under the supervision of the Committee and determined that the Offer is in the range of such valuation. GMP FirstEnergy concluded that, subject to the assumptions, qualifications and limitations provided in the draft formal valuation as at 5 February 2017, the fair market value of an Ithaca common share is in the range of C$1.60 to C$2.10 per common share. Details of the formal valuation will be included in the takeover bid circular that will be mailed to shareholders.
In view of Delek's existing shareholding in the Company, the
Agreement constitutes a related party transaction for the purpose of Rule 13 of the AIM Rules for Companies (the "AIM Rules").
Accordingly, the Directors (excluding the Delek related party Directors) consider, having consulted with Cenkos, the Company's Nominated Adviser for the purposes of the AIM Rules, that the terms
of the Agreement are fair and reasonable insofar as Ithaca shareholders are concerned.
All the Directors and officers of Ithaca have entered into lock-up agreements under which they have irrevocably undertaken to tender their own beneficial shareholdings in the Company, which amount in aggregate to 11,275,940 common shares, representing approximately
2.6% of the entire issued and to be issued common shares of Ithaca. The lock-up agreements are subject to customary termination
provisions and can be terminated if, for instance, the take-over circular is not mailed within the timescales set out in the Agreement and will terminate automatically if the Agreement is terminated. In the event that Delek does not take up its right to match a Superior Proposal (as defined in the Appendix below) and Ithaca terminates the Agreement in accordance with its terms, the lock-up agreements will automatically terminate.
Transaction Process & Timeline
Further details regarding the terms and conditions of the Offer, as provided for in the Agreement, and the process for tendering shares will be set out in a takeover bid circular, which is to be mailed to shareholders prior to 31 March 2017. The tendering process will
remain open for a period of at least 35 days following commencement
of the Offer.
Take up and payment for the shares is subject to a minimum tender condition that requires more than 50% of the common shares being deposited pursuant to the Offer (excluding common shares already
owned by the Delek group) (the "Minimum Tender Condition"). There is no obligation on Delek to undertake any form of subsequent
acquisition transaction to acquire the remaining common shares of Ithaca. The transaction is subject to customary closing conditions, including all necessary regulatory approvals.
The Offer is not subject to any financing condition. As is customary, Delek has confirmed that it has sufficient resources available to
fund the cash consideration for all of the shares acquired pursuant
to the Offer and for all payments that may become payable as a result of Delek and its affiliates owning more than 50% of the shares.
The Agreement provides for, amongst other things, a customary Board
of Directors support condition, a non-solicitation covenant in
respect of any competing offers from third parties, a "right to
match" provision for Delek and a provision which provides for the payment by Ithaca to Delek of a break fee in the event that the Agreement terminates in certain circumstances. Further details on the Agreement are set out in the Appendix to this announcement.
Copies of the Agreement, the lock-up agreements, the takeover bid circular, the directors' circular and certain other related documents will be filed with Canadian securities regulators and will be available on SEDAR at www.sedar.com.
Stella Update
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